4 strategies millennials have used to quickly pay off $ 25,000 student loans



  • After losing her job and the financial crisis, Ashley Patrick decided to get out of debt.
  • She had to pay off $ 25,000 in student loans, so she and her husband took aggressive action.
  • They put their 401 (k) savings on hold, cut their spending, and carefully tracked their payments.
  • Read more stories on Personal Finance Insider.

For many of us student loan debt may seem like a ball on a chain that we have been dragging for years.

Here’s how Ashley Patrick treated her $ 25,000 in student loans. When her husband lost his job and the couple couldn’t pay back quickly the loan they took on their 401 (k) to renovate their home, they ended up in debt to thousands of the IRS – and they never wanted to be in that position again.

“The fear of losing our job again and never ending up in that position was our motivator,” says Patrick, 36, who lives in Charlotte, North Carolina and is the founder of the company. Budgets just got easier… “Student loans were our last loan and made up the largest amount.”

To pay off the debt quickly, Patrick and her husband made four changes to their budget – and they worked: They paid off the debt in 10 months.

1. They have suspended the payment of pension contributions.

At the time, Patrick and her husband invested a total of 11% in their 401 (k) retirement benefit plans – Patrick saved 5% of her income and her husband contributed 6% of his salary.

To pay off student debt as quickly as possible, both temporarily suspended 401 (k) payments.

2. They were selling unnecessary items on the Internet.

To raise additional funds to pay off the debt, Patrick and her husband sold everything they didn’t need, including some of their children’s belongings, their wall decor, lamps, and several larger pieces of furniture. They also ditched a trailer and an ATV to pay off debt faster.

While they were selling high value items to large family members, they were selling smaller items at their home on Craigslist. Overall, they made between $ 300 and $ 500 through online sales.

3. They reduce additional services

While Patrick and her husband earned $ 125,000 a year together, they kept their living expenses to a minimum in order to put the extra money into their student debt.

To save on monthly living expenses, the couple didn’t buy everything they didn’t need right away, including well-known brands. “When we got to the last two months, my husband said,“ When we get out of debt, can we buy shaving cream again? “That’s how tense we were,” Patrick said.

The couple also cut back on travel and did not travel to Kansas to see their family, saving them at least $ 1,000. Patrick’s meals were planned and rarely eaten outside, which helped them cut their food budget in half, spending just $ 600 out of more than $ 1,200.

To help her stick to her budget, Patrick also used cash envelope systemwhere you put in an envelope all the money you need to spend on category X within a month.

4. She tracked their way of paying off the debt.

To keep motivated to actively pay off their student debt, Patrick calculated the daily interest rate on their debt to make sure they were making progress. In the beginning of their journey of paying off her student loans, she was charging interest on about $ 5 a day, or about $ 90 a month. This prompted her to send in additional payments as often as possible, usually every one to two weeks.

Patrick also kept a picture of her progress taped to the door of her closet and looked at her every day to stay in good shape. “To stay focused, I read stories about paying off debt every night before bed,” says Patrick. “I also joined like-minded groups on Facebook and listened to podcasts.”

The complete absence of debt allowed Patrick to quit his hard work as a police detective and stay at home with three young children. It also allowed her to turn the then business into a steady income, giving her the opportunity to be with her children. “When something comes up, I don’t worry about it,” says Patrick. “We just pay and move on. Before, when there were unforeseen expenses, I would cry and be stressed for several days. ”

For those looking to pay off their student debt sooner rather than later, Patrick suggests finding ways to cut and increase their income while staying motivated over time. “Just keep going even if you’re having a bad day, week, or month. What matters is progress over time. “


Source link